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Killer Quote: "In business development for a new venture, it's crucial to find customers who understand that our product is still evolving and who are willing to accept that it's not yet perfect." — Rob van der Meij, Capricorn Partners
Welcome to The Chemical Show™, where chemicals mean business. If you're looking for insights from business leaders of mid-market to Fortune 50 companies, this is the place to be.
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Victoria: Hi, this is Victoria.
I am back with another great
episode of The Chemical Show.
And this one's kind of special
because it is a two part series,
which is not something we do often.
I am speaking today and next week
with Rob van der Meij, who is a
partner at Capricorn Partners, which
is a venture capital and investment
management firm focused in on clean
tech chemicals and other investments.
Rob is a wealth of information, and
we had such an amazing conversation
about the role of venture capital.
How, uh, Capricorn and other VC companies
investing in, in early stage startups
really make a difference in chemical
companies in the role of clean technology
and in accelerating this innovation.
You're going to hear about it this
week and next week, and I hope
that you listen to both episodes.
Um, what we're going to be talking
about today though, is, you know,
sustainable investing practices, the
critical role of company leadership
and how Capricorn Partners helps
to navigate the landscape of
venture capital investing in clean
tech and the chemical sectors.
You don't want to miss this.
This is like a learning laboratory for
anyone that's interested in understanding
how do we really bring innovations
to market and how to venture capital
companies help in driving this innovation
in driving us to a cleaner, greener,
more sustainable future, Listen in,
I think you're going to enjoy it.
voiceover: A key component of the
modern world economy, the chemical
industry delivers products and
innovations to enhance everyday life.
It is also an industry in transformation
where chemical executives and workers
are delivering growth and industry
changing advancements while responding
to pressures from investors, regulators,
and public opinion, discover how
leading companies are approaching these
challenges here on the chemical show.
Join Victoria Meyer, president
of Progressio Global and
host of the chemical show.
As she speaks with executives across the
industry and learns how they are leading
their companies to grow, transform, and
push industry boundaries on all frontiers.
Here's your host, Victoria Meyer.
Victoria: Hi, this is Victoria Meyer.
Welcome back to The Chemical Show
where chemicals means business.
Today I am speaking with Rob van der
Meij, who is a partner at Capricorn
partners, which is a venture capital and
investment management firm focused on.
Innovative companies that
help people and planet.
So clean tech and green
chemicals and other things.
Rob's a chemical engineer and has
spent the majority of his career in
chemicals at big companies, including
Akzo Nobel and Shell Chemicals.
In fact, I met Rob at shell and we
might get into that part of the story.
Um, and then he has since been CEO
of a number of startups before he
started and joined Capricorn Partners.
So we're going to be talking
about the role of innovation, how
venture capital plays into it and a
little bit about clean technology.
So Rob, welcome to the chemical show.
Rob: Thanks, Victoria.
Victoria: Happy to have you here.
So, so let's just jump right in.
You have worked at some of
the world's biggest companies.
Um, and now you focus on startups with
innovative technologies and really,
frankly, quite small companies.
So first of all, how'd you get interested
in chemicals in the first place?
And then secondly, how did you
make this shift from big to small?
Rob: Okay.
A lot of questions in one go.
So, um, I got interested in
chemicals because my, my brother
studied chemical engineering.
And, um, when I went to look
at universities on what to do,
um, I found the, the, the part
chemicals where it creates stuff.
You take molecule A and B and you make C
and that was kind of like a magical box.
And, uh, still when I think about my,
uh, my graduation work, my thesis there
on the role of zeolites in methanol
to elephants, that's, uh, almost 40
years ago, but it's still actual.
So
the code has not been cracked, uh,
but it was kind of magical to see
methanol going into your pilot plant.
And, and then smell gasoline
coming out, you know, obviously
we had a leak, but okay.
Um, yeah, but, uh, so that that's
how I got interested that in, in
a chemical business, in a chemical
industry, you create stuff and,
um, that, that got me going.
And, and then, yeah, I worked at,
at Akzo Nobel in, in catalyst and
technology business, and then in Shell
Chemicals, first in catalyst, and then
later on in the, uh, in the surfactants
business where, where we both worked.
And, um, yeah, the, the, the chemicals
industry, it's a cash machine on the
one hand, you know, because it's, it
runs very large facilities with an
immensely important role in the world.
At the same time, it, it, it
has this questionable image.
Victoria: Right.
Rob: Partly, partly probably deserved
and probably also partly very undeserved,
but, um, then I switched to, uh, to
being an entrepreneur, um, basically in
Shell Chemicals, there, there was this,
you know, you kind of saw a little bit,
you know, plant based stuff coming.
And in our own business in the
surfactants, Shell had the ethylene
based surfactants and you saw the
palm oil based surfactants coming in.
That intrigued me, then biofuels got there
and Shell clearly did not have a strategic
interest at that time to go that way.
an acquaintance of me from Akzo
Nobel had developed some patents
and started a small company.
And then I decided, you know, I
can, Shell is a freight train and
you can only influence a little
bit, but in a small company,
you can have a lot of influence.
So then I decided, okay, you know, you
don't get those that many chances in
your life to do something completely
different in a field where you,
you think you can be comfortable.
So that's when I jumped to, uh, to the
small corporate world and I learned, uh,
the hard way how American venture capital
works where, you know, in my first,
uh, investment as a founder, as a CEO.
Uh, I was also the first
one to get fired, um,
partly because I was stubborn.
Partly, I think the venture capital world
at that time, grossly overestimated its,
its capacity to, to be in the energy
world, you know, this, this is 2008, 2009.
And venture capital from Silicon Valley
had the, the idea that they could
change how the energy world works or,
Victoria: Right.
Rob: you know, but, but yeah,
it's, it's a very different world.
It's fascinating in small companies
to, to see what you can do by yourself.
Now it's, and the impact you have on
that at the same time, it's usually
frustrating because, you know, one
thing you, you see when you work at
a company like Shell is, is the, the
incredible power of the machine that
you have there, you know, and, and also.
The quality of the people in
systems, you know, people complain
a lot about working in corporate
is bureaucratic, blah, blah, blah.
But, but in reality, you know,
shells, uh, is a, is a, is a
continuous asset management machine.
You know, if, if you remember the plant
managers we've had at the time and, you
know, at Stanlow and Geismar and how
every year, year on year, they improve
performance continuously, you know, I,
I thought that that's an amazing skill.
Victoria: It is.
Rob: And then the supply chain complexity
that a company can handle, but then
when you come to the startup world.
You know, where, where people have
very little experience and then how
they grossly underestimate supply
chain or, or manufacturing complexity
or construction complexity, you know,
and that's where if, if you have kind
of the mix of experiences, I have it.
It actually, you know, is a good
place because I'm not a specialist
in anything, but I know enough
of it all that I can be of use.
Let's put it that
Victoria: Yeah, absolutely.
Well, and I think that's
an interesting point.
I think the, uh, people do underestimate
the value that the processes, um, and the
systems and the brands have when you're
at major corporations, um, across the
industry, Shell, Dow, Akzo et cetera.
Um, and then you move to a
startup, which is nimble and fast.
But, but probably makes a whole
lot of mistakes and doesn't know,
a lot of times you don't know what
you're doing and how you're doing it.
So, uh, quite a contrast between the two.
Rob: Definitely.
Victoria: Yeah.
So let's talk a little bit about
Capricorn Partners, um, just in terms
of who you guys are and what you do.
Rob: Yeah.
So we're, we're, what we call an, uh,
alternative, uh, we operate under a
license of the alternative investment
funds management, um, regulatory.
So we are what you call a regulated fund.
Which means we are under guidance of
the European financial authorities.
So we have quite some, some good
compliance, uh, procedures, risk
management, et cetera, and we manage both
listed equity funds that invest in clean
tech, and we manage venture capital funds.
That invest in, in clean tech, in
digital and health type, um, startups.
So we have different funds.
We are a player that plays in the,
in the more specialized ranges.
Um, typically the, the series A type
financing, which means, you know, there
is a market, there is a prototype.
Company has eyes on, on how to get there.
You know, this is the phase
where companies are between
say five and 15 people.
Um, And that's when we start to invest.
So you're beyond science, you know,
but, but you're not in the market and
you haven't scaled technology yet.
Victoria: Yeah,
Rob: that's the point that we like to
Victoria: I, you know, before we
started recording, you know, we,
we were talking about how the fact
that, um, frankly, most of the, the
chemical industry and certainly people
are big established companies don't
actually understand how venture capital
works, the role of venture capital.
And I think certainly we see.
Um, in the chemical space, when we think
about green chemistry, there is a lot of
startups right that are at, uh, varying
sizes, varying degrees of success.
Some quite small, um, with small
valuations, some quite small
with really big valuations.
Um, and I've had the opportunity to speak
with, you know, several different people,
some of whom, um, uh, Capricorn Invests.
So I think about, uh, James Gibson
at Void Polymers and, uh, and
Keith at Econic Technologies.
And I've also spoken with, uh, Uh,
Gaurab Chakrabarti from Solugen, which
is arguably one of the biggest clean
tech startups, uh, in chemicals today.
Um, but, but what's really the role, I
mean, when you, cause you've obviously
experienced this from the corporate
side, and now you've experienced
it from the small company side, and
now you're experiencing it from, uh,
the venture capital side in terms of
going I guess identifying investments
and figuring out where to put money.
So tell us how that works.
Rob: uh, how much time we have.
So, no, it's interesting.
I, there's no real blueprints.
Every follow a sequence on, on
scouting, scanning, selecting.
You know, et cetera, that,
that, that's all pretty obvious.
But the, the, the thing is really,
um, one of the key things now that
you have is, Um, there's a lot of good
presentations out there, but, but the
key question for us is always, is this,
uh, a good, is this a good presentation
with a bad idea now, or is this a
bad presentation with a good idea?
So, the thing that we do in our
funds, um, and like in the cleantech
team, all the people in the cleantech
team have a scientific, technical,
engineering, business background.
So, so before we make any, any serious
attempt to, to look at the company, we
look at, you know, is it thermodynamically
possible and, and you may laugh about
it, but, but we've seen proposals that
from thermodynamics make no sense at all.
And, and some of these
actually get financed.
Okay.
So, so, so don't get me going on direct
air capture technologies, et cetera.
But, um, we, we can have a different
discussion about that, but at the
same time, you see, there's a business
need for these things and therefore
things get through, but what we try
to do is, is really, we have a slogan
where we say we invest, you know,
where technology impacts most, but,
but then we have the second question,
which is like, does it make sense?
Victoria: Hmm.
Rob: Is it thermodynamically possible?
Is it chemically possible?
And then what you get, does it make sense?
And the does it make sense
question is, Is business?
but for instance, also complexity
of manufacturing, you know,
it's, it's, it's like, you also
have a chemistry background.
So, you know, with, with 25 synthesis
steps, you can make almost any molecule
you want, you know, but, but outside
the pharmaceutical industry probably
doesn't make any sense at all.
Victoria: Yeah.
You can't actually
afford it at that point.
Rob: Yeah.
And, and, and then the other
question is towards the market.
It doesn't make sense for the
customer to buy this or use
this product or technology.
Victoria: Yeah.
Rob: And, and that's the, that's
the most critical thing to look at.
And anything else, you know,
uh, the political correct answer
is of course that I really like
the team and blah, blah, blah.
But if you have a bad idea, even
with a good team, it's hard to make
that work in the chemicals world.
If you get to software and SaaS,
it's, it's a different thing, but,
but in, in the, in the engineering
chemical tech world, you know, you
cannot have a product that works 95%.
Victoria: Hmm.
Rob: I mean, still today,
Microsoft Windows is not perfect.
Yeah, but,
Victoria: Tell me about it.
Rob: But, but yeah, but, but the
chemicals plant that that's not perfect
can explode or, or, or when you don't
get your cost, you know, over variable
costs, it's, it's a money sink.
And that's, that's one thing
I really learned in Shell.
Like this, this cost focus
is, is an enormous thing.
And a lot of people underestimate that.
And, and, and so we, we want to
have, does it make sense to do it?
Does it make sense for
the customer to buy it?
And doesn't it make sense to manufacture
it now that that's the short version.
Victoria: And, yeah, , I guess the
question for me maybe isn't a question
I think for a lot of people is
like, you know, why venture capital?
How does it work?
And, and so you talk about going in and
investing a lot of series A, which means
in my, uh, very simple point of view,
it, it tends to be companies that are.
The technology has been developed
to a certain degree, and then
it's ready to start moving into
some degree of commercialization.
Small scale, probably initially.
Um, but there's still so many unknowns.
And I guess the question
is, , why do people go to venture
capital to make this happen?
Versus some other form of funding.
How do you guys fit into the ecosystem of
innovation, um, and business development?
Rob: Um, well, so, so a lot of corporates
are good at evolutionary progress.
When they have a product,
they can improve it.
When they have a technology,
they can improve it.
But if they want to try something new in
a big corporate, there's hardly space.
There's no room to do real new things.
So startups are there to kind
of promote that, that ecosystem.
Now they are in this ecosystem supported
by accelerators and hubs and whatever.
And with these startups,
you can work out ideas.
It's trial and error.
And so the startups, they need finance
and there's a lot of say governmental
regional finance, but the, the, the,
say the chemistry based world is,
is quite, um, not that many people
that have the knowledge in that.
And if you look at life
sciences, there, it's a developed
ecosystem of, of startups.
. And it's a very common model to go
to venture capital for your research
and then large pharmaceutical
companies, they are basically selling
marketing and regulatory machines.
Victoria: Hmm.
Rob: So they need new
molecules in their pipeline.
They don't develop a lot
of molecules themselves.
Because it's very costly, high risk takes
a long time, but once there is a molecule
that there is an acquisition model, in the
pharmaceutical world, there's an existing
acquisition model where you can invest in,
in clinical trial, phase one, phase two,
phase three, there's certain valuations
related to that in terms of the size of
the market in the chemicals industry.
We don't have that yet.
Victoria: It
Rob: chemicals industry.
Victoria: that direction though.
Right.
If I think about what's
going on in biosurfactants,
Rob: hope so.
Victoria: let's say, right.
The, that,
Rob: surfactants is,
is, is a good example.
That's where it starts to happening.
Um, yeah, but, but so we get
into the series A, as, as a
specialized investor that helps
co investors to put money in it.
Like, they have some trust in us
Victoria: Got it.
Rob: Because at least we
Victoria: of provide the
vetting process, I suppose.
Rob: Yeah, we can draw the
molecule, you know, that's
that helps and, and, and, yeah.
And, uh, and then we can estimate like,
you know, we can kind of do an evaluation.
Is this scalable or not?
And how would you do it?
And how much risk is involved?
You know, and, and, and then kind
of call for the other investors
like, Hey, this, this has a chance.
This, this is,
and the role of venture capital is
then really to, to take that, say
first three to seven years in a company
to, to bring it to a stage where,
you know, you, you get to the either
large scale demo, or you, you get to
the real commercialization phase.
Victoria: Okay.
So you maybe answered my question,
which is what's your investment horizon
when you guys put money into a startup?
How long, how soon, how long do
you plan to stay with that startup?
Rob: Uh, well, most venture capital
funds have a 10 year horizon now, but,
but they have plus one, plus one, or
plus two, plus two as, as extensions.
And, and actually the 10 years
is too short really for most.
But the way we balance
that is by investing.
We only do early stage investments
at the early phase of a fund, you do
some later stage investments, too.
So you balance your portfolio
between early and later stage.
So that means that at some companies,
you'll stay three, five years.
Other companies, you, you stay,
you know, five to eight, 10 years.
That depends.
Victoria: Got it.
Got it.
Yeah.
And your point about it,
you maybe even need longer.
Um, I know like the
LanzaTech story, which Is...
,
It's a great success story, right?
I, it's gotten, um, a lot of investment,
it's getting a lot of success, et cetera.
And for those that hadn't followed
their story, they don't realize
this is 20 years in the making.
This was not overnight success.
This was not five years success.
It was 20 years to get to
Rob: Well, and,
Victoria: substantial commercialization.
Rob: and, and, uh, uh, our story is
Avantium Capricorn invested early
stage in Avantium and, and we've been
in the, we just sold our last portion of
shares because we liquidated the fund.
Victoria: Okay.
Rob: So we could not keep the shares.
And otherwise we may
have, we may have hang on.
But, um, I think we've been,
uh, 16 years in a Avantium
Victoria: No kidding?
Rob: Now and, and, and, and yeah,
but, but if you think about it in that
timeframe, we've had the financial crisis.
Uh, as, as, as one big thing, you
had low oil, high oil prices, um,
the whole development of wind,
electricity, solar, uh, and COVID.
Uh, so, so the people at Avancium,
Tom van Aken, really, you know, the,
the persistence of these people is,
is admirable, you know, but, but hey,
they're, they're building the plant.
And I think opening is scheduled
October, November, so great.
Yeah.
Victoria: so Rob, as you mentioned
that I hadn't realized that you
guys were part of Avantium as well.
So I'm going to have to, so when people
are listening to this or reading this,
I'm going to end up linking all of the
episodes of executives I've talked to that
are somehow affiliated with Capricorn.
So.
I talked to Tom Van Aken, Avantium, uh,
I've spoken with Corey Tyree of Trillium,
I think you, you made that intro.
James Gibson, Void Technologies.
Uh, and then of course
Keith, uh, um, Keith Wiggins.
There we go.
Keith Wiggins from, uh,
from Econic Technologies.
So there's a whole lot of, uh, clean
tech energy investment that, uh,
we can, that I've managed to talk
to and that we'll link to this,
that have a Capricorn connection.
Rob: Definitely.
Victoria: Great.
So, so Rob, how do you contrast, um.
What you guys do from a venture
capital perspective versus.
Private equity or versus some
of the big venture capital?
Cause it sounds like you're coming in very
early stage, relatively small investments.
When we think about, um, just heck,
let's be honest, the scale of what it
costs to build and develop a chemical
plant or chemical product, relatively
small investments, but how do you
contrast what you, what you, um, are
doing versus what like a private equity
firm might do or a bigger VC firm.
Rob: Okay.
Yeah.
So when we enter, we do a smaller
ticket, but at that point in time,
the valuation of the company is
still on the, on the lower side.
So we get a decent share package.
And then when the company grows,
we, we continue to invest.
So we stay until there's
a growth phase where.
We cannot no longer follow and then
we start to dilute, but by that time,
you hope that the valuation has gone
up sufficiently and that your dilution
is compensated by valuation increase.
Victoria: Got it.
Rob: And of course, at some point,
we need to sell it now, um, and that
that's what I tell all the people you
just mentioned to James and Keith and
others, like, you know, we, we invest
to sell at some point, you know,
so, um, you have to agree to that.
The difference between venture
capital in the early phase is.
We get pretty actively
involved in, in the board
Victoria: Okay.
Rob: where, where we use our network.
Uh, uh, we, we can help the, the,
the management team on, you know,
look at this, think about that.
Um, you need to make changes to, to
people or to processes procedures.
Um, we help the connection,
uh, you know, not to strategic
partners, to service partners,
but, but also syndicates to invest.
When, when we look at a company in,
in our first investment round, we also
look at investability down the road.
are there co investors that
are interested in this space?
And of course, are there potential
exit parties interested in this space.
But then our role is really in that,
that syndication and private equity
and, and say, late stage venture
capital really comes into play
when the technology risk is out.
And when the initial business risk is out.
Victoria: Got it.
Rob: And, and they come in and, and
they're really good at growth, you know,
when, when you then say, all right, we,
we, we put in chunks of 50 million, a 100
million, and we got to make this work.
Victoria: Yeah..
Rob: But that, that's not our role.
You know, we, we do that pre work and
when it comes to then the, the financial
reengineering and, and, you know, and the
growth finance, uh, that that's for, but.
But we like to be at that
beginning of that part.
Victoria: Right.
And so you're really in a lot of
the derisking of, of derisking and
validation, I guess, of the technology,
of the markets, of the investment to
help it progress to the next step.
Rob: Correct.
Yeah.
It's, it's de risking of
technology and business.
Yeah, that's, and, and in some startups,
you have to do it at the same time.
You know, you do it parallel.
And then it's like, how do you do that?
Victoria: Yeah.
Rob: Yeah.
I'll be, because it's, it's, if you take,
for instance, business development, you
know, um, business development for an
existing business is very different than
business development for a new business.
You know, in business development for
a new business, you really have to look
at customers where do they understand
that we're not completely finished and
do they accept that this is not perfect.
um, and, and also when it
doesn't work, is, is it not a
failure to us in the market?
You know, it's, it's sad, uh, it's, it's
like your first new surfactant, you may
not want to talk to Procter and Gamble.
You may want to wait till you're
a little bit more developed.
And also, and rightfully so for these
kinds of companies, they will only be
interested If you have a pathway to large
scale, you know, they're not interested
in a tiny little bit of something.
If you want to sell to these type of
customers, you have to be able to scale.
If you're in a niche market, You
can work with different customers.
So in the business development phase
early on, you have to think about that.
You know, where do we have to
prove, what do we have to prove?
You know, and, and how do you go about it?
And then, and then you balance
your risk profile on that.
Victoria: All right.
And I am calling a pause right here on the
first half of my conversation with Rob.
I hope you got a lot out of it.
I know I really did, so much wisdom
about the role of venture capital,
how small innovative companies really
are critical for driving innovation.
Innovation and development and
the future of chemicals and the
role that venture capital plays.
So stay tuned.
Thank you for listening today.
Next week, part two, you are
not going to want to miss that.
Rob dropped some great bombshells that
are going to be hugely valuable to you.
Thanks for listening today.
We'll talk to you again soon.
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